A critique of Tesla

Tesla Motors is wasting time, energy and money by not opening independent franchises, according
to Keith Crain, the editor-in-chief of
Automotive News.

In a
column, Crain says the electric-car company is making a mistake by relying on a small number of
company-owned stores. His comments are in line with many auto-industry veterans who have practical
concerns about Tesla’s approach.

"When I buy a product, I want a retailer nearby where I can get service and satisfaction," he
said. "If there isn't a service outlet nearby, it is up to the manufacturer to make arrangements to
provide service. If you care about customers, you have to be able to take care of them when they
need help."

Tesla officials have said that their retail model is the most effective way to sell an emerging
technology to a customer base that needs to be educated about the product.

This strategy has led to fights with traditional dealers in several states who see Tesla as a
threat to a system in which most cars are sold by independent franchises.

Last week, Tesla
reached an agreement with Ohio dealers that will allow it to have no more than
three stores in the state.

Crain thinks Tesla and its customers would be better off if the company worked with 40 to 50
dealers to set up stores.

"The franchise system works for the manufacturer, and, more important, it works for the
customer. It lets a manufacturer use capital for better things than setting up factory-owned
dealerships," he said.